Reserve Bank of India (Housing Finance Companies) Directions, 2025 (Updated as on April 15, 2026)

1. Rules start on posting

The rules take effect the day RBI posts them on its website.

2. Who must follow this

This rule book applies to every housing finance company registered under Section 29A of the NHB Act.

3. Other RBI rules still apply

Directions issued by any other RBI department that bind the HFC must still be followed.

4. Half must reach individuals

At least 50% of that housing finance must go to individual borrowers.

5. Plot loans need a promise

A plot loan needs the borrower's promise to build within three years.

6. Name of the rules

The rules are called the Reserve Bank of India Housing Finance Companies Directions, 2025.

7. Chapter IX binds auditors

Chapter IX applies to the HFC's auditors, not to the HFC itself.

8. NHB is the supervisor

Supervisory reporting for the HFC goes to the National Housing Bank, its supervisor.

9. What counts as housing finance

Housing finance means financing to construct, purchase, renovate or repair a home.

10. Sixty per cent housing test

An HFC is an NBFC whose housing-finance assets make up at least 60% of its total assets.

11. Net owned fund defined

Net owned fund is the HFC's net owned fund as defined under Section 29A of the NHB Act.

1. Minimum net owned funds

An HFC needs at least ₹20 crore of net owned funds to carry on housing finance.

2. Registration can be cancelled

An HFC that misses the net owned fund deadline can lose its Certificate of Registration.

3. Reclassified as NBFC-ICC

An HFC that cannot meet the housing-finance test becomes an NBFC-ICC instead.

4. Board approves the policies

The board approves the HFC's policies and reviews mechanisms regularly.

5. One month to certify

The HFC must give the auditor's certificate on that to RBI within one month.

6. NOF deadline was 2023

An HFC below ₹20 crore in net owned funds had to reach ₹20 crore by March 31, 2023.

1. Capital ratio at least 15%

An HFC's Tier 1 and Tier 2 capital must total at least 15 per cent of risk weighted assets.

2. Tier 1 at least ten

Tier 1 capital alone must be at least 10 per cent at all times.

3. Capped at Tier 1 level

Tier 2 capital may never exceed 100 per cent of Tier 1 capital.

1. Four asset classes

The HFC sorts every loan into standard, sub-standard, doubtful or loss.

2. No upgrade by reschedule alone

Rescheduling a loan alone does not upgrade its asset class.

3. One rupee when unknown

If a company's balance sheet is missing for two years, its shares are valued at one rupee.

4. Loss assets fully written off

A loss asset is written off in full, or fully provided for if kept on the books.

5. Doubtful provision, 25 to 100

The secured portion of a doubtful asset can need anywhere from 25% to 100% provisioning.

6. Sub-standard provision fifteen

A sub-standard asset carries a general provision of 15 per cent of the outstanding amount.

7. Teaser loans need 2%

Standard housing loans at teaser rates carry a 2% provision on the outstanding amount.

8. General standard provision 0.4%

Ordinary standard housing loans need a general provision of 0.4% of the outstanding.

9. Stress flagged on default

The HFC flags a loan as a special mention account immediately on default.

1. LTV limit ninety per cent

For a loan up to ₹30 lakh, the loan-to-value ratio may not exceed 90 per cent.

2. LTV limit eighty per cent

Between ₹30 lakh and ₹75 lakh, the ratio may not exceed 80 per cent.

3. LTV limit seventy-five

Above ₹75 lakh, the ratio may not exceed 75 per cent.

4. Fifteen per cent per HFC

Investment in the shares of one other HFC may not exceed 15 per cent of its equity capital.

5. Group exposure caps

Exposure to one group real-estate company may not exceed 15 per cent of Tier 1 capital.

6. Twenty per cent land cap

The HFC's own investment in land or buildings may not exceed 20 per cent of its capital fund.

7. Three years to dispose

Land taken over on default is sold within three years, unless NHB extends that.

8. Capital market cap forty

The HFC's total exposure to the capital market may not exceed 40 per cent of its net worth.

9. Direct shares capped twenty

Within that, direct shares and equity mutual funds may not exceed 20 per cent of net worth.

10. Broker only introduces the deal

A broker's role stops at bringing the two sides together.

11. Broker limit five per cent

No single broker may carry more than five per cent of a year's brokered deals.

BankPulse example. An HFC put 200 crore of deals through brokers last year. Five per cent of 200 crore is 10 crore, so that is what any one broker may carry. Deals done straight with a Primary Dealer are left out of that limit.

12. Small HFCs are exempt

That five per cent broker limit does not apply if total yearly transactions are under ₹20 crore.

13. Board panel of brokers

The HFC's top management approves a broker panel, reviewed at least once a year.

1. Liquid assets rose in 2025

The deposit-taking HFC's liquid-asset requirement rose from eight per cent to ten per cent on July 01, 2025.

2. Second buffer also rose

A second deposit buffer rose from fourteen percent to fifteen percent on July 01, 2025.

3. Deposits capped at 12x NOF

Total deposits and NHB borrowings may not exceed twelve times the HFC's net owned funds.

4. Freeze on fresh deposits

An HFC over its deposit limit stops taking fresh deposits and renewals.

5. Early exit rate capped

Early withdrawal after three months but up to six months pays at most four per cent a year, for individuals.

6. One per cent below normal

After six months, early exit pays one per cent below the normal deposit rate.

1. Auditors rotate every three years

A non-deposit HFC under ₹1,000 crore rotates its audit partner every three years.

1. Auditor reports non-compliance

The auditor must report certain non-compliance directly to NHB and RBI.

1. Sixty days to switch

A borrower may close or switch a loan within 60 days of a disadvantageous change, free of charge.

2. No cash payment to agents

The HFC pays DSAs and DMAs only by direct credit to their bank account, never in cash.

3. Guarantor default is wilful

A guarantor who can pay but refuses is treated as a wilful defaulter too.

4. Customer data stays private

The HFC may not reveal customer account data to anyone, including group companies.

5. No pre-payment levy, floating loans

The HFC may not charge a pre-payment levy on a floating-rate housing loan closed early.

6. No discrimination in lending

The HFC may not discriminate on sex, caste or religion when lending.

7. No disability discrimination

The HFC may not discriminate against visually impaired or disabled applicants.

8. Calls only between set hours

Recovery calls to a customer happen only between 8 a.m. and 7 p.m.

9. No third party during visits

Only Recovery Agency employees may visit a borrower's premises, and no one else joins them.

10. Complaint pauses recovery agency

The HFC does not send a case to a recovery agency while a complaint about it is unresolved.

11. No extra burden, visually impaired

No extra interest or collateral burden may be placed on a visually impaired customer.

12. Thumb impression, not illiteracy

The HFC does not treat a visually impaired customer as illiterate.

13. Reject reason given in writing

If the HFC will not lend, it tells the customer why, in writing.

14. One week to acknowledge

The HFC tries to acknowledge a written complaint within a week.

15. Six weeks for final response

The HFC tries to send its final response within six weeks of a complaint.

16. Annual review of vendors

The HFC reviews each outsourced service provider's condition at least once a year.

17. Written permission for references

The HFC gets the customer's written permission before giving a reference about them.

18. Recovery agents trained yearly

All of the HFC's recovery agents complete IIBF training within one year.

19. One month, then NHB

If the HFC gives no reply within a month, the complainant may go to NHB.

20. Lok Adalat for small loans

The HFC is encouraged to use Lok Adalats for housing loans under ₹10 lakh.

1. No loans for unauthorised colonies

The HFC may not lend on property in an unauthorised, unregularised colony.

2. No disguised commercial-use loans

The HFC may not lend on a residential property the applicant plans to use commercially.

3. Disbursal follows construction stage

Disbursal of a housing loan follows the stages of construction, not paid upfront.

4. No servicing loans for builders

The HFC does not offer loan products where builders service the dues for borrowers.

5. DTA deducted from Tier 1

A deferred tax asset counts as intangible and is deducted from Tier 1 capital.

6. Only excess above 20% moves

The HFC may use only the amount above the statutory 20 per cent minimum in its reserve fund.

7. Penalty under Section 52A

RBI or NHB can fine the HFC for any breach of the Act or these directions.

8. Sanctioned plan required first

For a construction loan, the HFC first obtains a copy of the sanctioned building plan.

9. Seven days for counterfeit notes

A quarterly counterfeit-note report reaches NHB within seven days of quarter end.

1. Fifteen days to NHB

Audited financial statements reach NHB within fifteen days of the annual general meeting.

1. Old rules stand repealed

These directions repeal all earlier RBI instructions to housing finance companies.

2. Past actions stay governed

Anything already done under the old rules stays governed by them.